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Tuesday, 27 March 2012

The Reserve Bank of India on 26 March 2012 restructured the fair practices code (FPC) to be adopted by non-banking finance companies (NBFCs) while doing lending business. The guidelines issued by the central bank covered general principles on adequate disclosures on the terms and conditions of a loan and also adopting a non-coercive recovery method.

The modified FPC is required to be put in place by all NBFCs with the approval of their boards within one month from the date of issue of this circular (26 March 2012). Also RBI directed that the FPC should be published and disseminated on the web-site of the company for public information.

NBFCs were however granted the freedom of drafting the FPC, enhancing the scope of the guidelines. It is however not to contradict the spirit dominating the guidelines. The RBI directed NBFCs to mention the penal interest charged for late repayment in bold in the loan agreement. Also the NBFCs were directed not to resort to undue harassment such as persistently bothering the borrowers at odd hours and use of muscle power with respect to loan recovery.

The RBI had in 2006 issued FPC norms for all NBFCs to be adopted by them while doing the lending business. It had also covered norms on adequate disclosures on terms and conditions of a loan, and also adopting a non-coercive recovery method.

Sunday, 25 March 2012

Inflation is the measure of rise in general prices in any economy over a given period of time. Normally inflation is measured every week, but for the policy purposes its annual measure is taken into account. Inflation is measured by the government by considering the changes in wholesale price index and those in the consumer price index over the given period of time.

Inflation is of several types and the ‘creeping’ or ‘walking’ inflation of upto 5 per cent per annum is called functional inflation and considered good for the health of growing economies. Running, galloping and hyper inflation is bad for the economy as it also erodes the real income level of the poorer sections of the emerging economies, thereby making their livelihood even more difficult. Hence, in a developing economy, the government policies aim at keeping the inflation rate within the functional limits.

Due to increased prices of the food items, India, along with most parts of the world, faced high inflation rate in double digits during the middle of 2008, which could be termed as ‘running’ inflation. The government took several monetary and fiscal policy measures to control it and succeeded to bring it down. But in early 2009 a peculiar phenomenon was experienced. In March 2009, the inflation rate in the country went down as low as 0.44 per cent, a sudden drop from 2.43 per cent during the week prior to that. This has given rise to the speculation that the country may experience zero inflation rate. The apprehensions are that zero rate of inflation would act as discouragement to the new investors, who are likely to put on hold their new projects, which would affect the growth rate of the economy. Zero inflation reduces the level of profits drastically. Such a situation, though may be cheered by the consumers and benefit the poorer sections spending most of their earnings on consumption, yet may actually reduce the economic activity in the economy to the minimum. This may be harmful to the economy in the medium and long run.

Saturday, 24 March 2012

Bank of Baroda, the public sector lender, on 22 March 2012 launched 1001 ultra small branches to provide banking services to the people of villages which don’t have access to banling services. The bank launched the ultra small branches under the financial inclusion initiative.
The virtual launch of 1001 ultra small branches was done by K. C. Chakraborty, Deputy Governor, Reserve Bank of India, in the presence of M. D. Mallya, Chairman and Managing Director, Bank of Baroda, at Varanasi.
On the same day, 551 ultra small branches were inaugurated across Uttar Pradesh and Uttarakhand. Bank of Baroda is set to open 1700 ultra small branches in various villages across the country.

Wednesday, 21 March 2012

1. RBI’s open market operation transactions are carried out with a view to regulate ____
(A) Liquidity in the economy
(B) Prices of essential commodities
(C) Inflation
(D) Borrowing power of the banks(E) All the above Ans (E)

2. Open market operations , one of the measures taken by RBI in order to control credit expansion in the economy me Ans ____
(A) Sale or purchase of Govt. securities
(B) Issuance of different types of bonds
(C) Auction of gold
(D) To make available direct finance to borrowers
(E) None of these Ans (A)

3. The bank rate me Ans ___
(A) Rate of interest charged by commercial banks from borrowers
(B) Rate of interest at which commercial banks discounted bills of their borrowers
(C) Rate of interest allowed by commercial banks on their deposits
(D) Rate at which RBI purchases or rediscounts bills of exchange of commercial banks
(E) None of these Ans (D)

4. What is an Indian Depository Receipt?
(A) A deposit account with a Public Sector Bank
(B) A deposit account with any of depositories in India
(C) An instrument in the form of depository receipt created by an Indian depository against
underlying equity shares of the issuing company
(D) An instrument in the form of deposit receipt issued by an Indian depositories
(E) None of these Ans (C)

5. Fiscal deficit is ____
(A) total income less Govt. borrowing
(B) total payments less total receipts
(C) total payments less capital receipts
(D) total expenditure less total receipts excluding borrowing
(E) None of these Ans (D)

6. In the capital market , the term arbitrage is used with reference to ____
(A) purchase of securities to cover the sale
(B) sale of securities to reduce the loss on purchase
(C) simultaneous purchase and sale of securities to make profits from price
(D) variation in different markets
(E) Any of the above Ans (C)

7. The stance of RBI monetary policy is _____
(A) inflation control with adequate liquidity for growth
(B) improving credit quality of the Banks
(C) strengthening credit delivery mechanism
(D) supporting investment demand in the economy
(E) Any of the above Ans (E)

9. "Sub-prime" refers to_______
(A) lending done by banks at rates below PLR
(B) funds raised by the banks at sub - Libor Rates
(C) Group of banks which are not rate as prime banks as per Banker's Almanac
(D) lending done by financing institutions including banks to customers not not meeting with
normally required credit appraisal standards
(E) All of the above Ans (D)

10. Euro Bond is an instrument _____
(A) issued in the European market
(B) issued in Euro currency
(C) issued in a country other than the country of the currency of the Bond
(D) All of the above
(E) None of these Ans (C)

12. The IMF and the World Bank were conceived as institutions to ____
(A) strengthening international economic co-operation and to help create a more stable and
prosperous global economy
(B) IMF promotes international monetary cooperation
(C) The World Bank promotes long term economic development and poverty reduction
(D) All of (A),(B) & (C)
(E) None of (A),(B) & (C) Ans (D)

19. The Branding Line of Bank of Baroda is ____
(A) International Bank of India
(B) India's International Bank
(C) India's Multinational Bank
(D) World's Local Bank
(E) None of these Ans (B)

20. The logo of Bank of Baroda is known as ___
(A) Sun of Bank of Baroda
(B) Baroda Sun
(C) Bank of Baroda's Rays
(D) Sunlight of Bank of Baroda
(E) None of these Ans (B)

21. One of the major challenges banking industries is facing these days is money laundering. Which of the following acts/ norms are launched by the banks by the banks to prevent money laundering in general ?
(A) Know your customer norms
(B) Banking Regulation Act
(C) Negotiable Instrument Act
(D) Narcotics and Psychotropic Substance Act
(E) None of these Ans (E)

22. Lot of Banks in India these days are offering M-Banking Facility to their customers . What is the full form of 'M' in 'M-Banking'?
(A) Money
(B) Marginal
(C) Message
(D) Mutual Fund
(E) Mobile Phone Ans (E)

23. Which of the following is/are true about the "Sub-Prime Crisis" ? (The term was very much in news recently.)
(1) It is a Mortage Crisis referring to Credit default by the borrowers
(2) Sub-Prime borrowers were those borrowers who were rated low and were high risk borrowers
(3) This crisis originated of negligence in credit rating of the borrowers
(A) Only 1
(B) Only 2
(C) Only 3
(D) All 1,2 & 3
(E) None of these Ans (D)

24. Which of the following is NOT the part of the structure of the financial System in India ?
(A) Industrial Finance
(B) Agricultural Finance
(C) Government Finance
(D) Development Finance
(E) Personal Finance Ans (E)

25. Which of the following is NOT the part of the Scheduled Banking structure in India ?
(A) Money Lenders
(B) Public Sector Banks
(C) Private Sector Banks
(D) Regional Rural Banks
(E) State Co-operative Banks Ans (A)

26. As we all know Govt. of India collects tax revenue on various activities in the country. Which of the following is a part of the tax revenue of the Govt. ?
(1) Tax on Income
(2) Tax on Expenditure
(3) Tax on property or Capital Asset
(4) Tax on Goods and Services
(A) Both 1 and 3 only
(B) Both 2 and 4 only
(C) All 1,2,3 & 4
(D) Only 2,3 and 4
(E) None of these Ans (C)

27. We very frequently read about Special Economic Zones (SEZs) in newspapers. These SEZs were established with which of the following objectives ?
(1) To attract foreign investment directly
(2) To protect domestic market from direct competition from multinationals
(3) To provide more capital to agriculture and allied activities
(A) Only 1
(B) Only 2
(C) Only 3
(D) All 1,2 & 3
(E) None of these Ans (A)

28. Which of the following groups of the countries has almost 50% share in Global emission of carbon every year ?
(A) US, China, India, South Africa
(B) India, china, Russia , Britain
(C) South Africa, Nepal , Myanmar
(D) US, Russia, China & India
(E) None of these Ans (D)

29. Many times we read about Future Trading in newspapers. What is Future Trading ?
(1) It is nothing but a trade between any two stock exchanges where in it is decided to purchase the stocks of each other on a fixed price throughout the year
(2) It is an agreement between two parties to buy and sell an underlying asset in the future at a predetermined price

(3) It is agreement between Stock Exchanges that they will not trade the stocks of each other under any circumstances in future or for a given period of time
(A) Only 1
(B) Only 2
(C) Only 3
(D) All 1,2 & 3
(E) None of these Ans (B)

30. Hillary Clinton formally suspended her campaign to ensure election of who amongst the following for the next President of USA?
(A) George Bush
(B) Barack Obama
(C) John McCain
(D) Boll Clinton
(E) None of these Ans (B)

31. Hugo Chavez whose name was recently in news is the _____
(A) President of Cango
(B) Prime Minister of Uganda
(C) President of Venezuela
(D) Prime Minister of Brazil
(E) None of these Ans (C)

33. Delimitation Commission has made a recommendation the next Census should be Panchayat-wise. When is the next Census due ?
(A) 2010
(B) 2011
(C) 2012
(D) 2013
(E) 2015 Ans (B)

34. The world Health Organization has urged that advertisements of which of the following should be banned to protect youth from bad effects of the same ?
(A) Tobacco
(B) Alcoholic drinks
(C) Junk Food
(D) Soft drinks with chemical preservatives
(E) None of these Ans (A)

35. Which of the following countries has allocated a huge amount of US $ 10 billion to provide relief to its earthquake victims ?
(A) Japan
(B) South Korea
(C) China
(D) South Africa
(E) None of these Ans (C)

36. Which of the foloowing names is NOT closely associated with space Programme of India or any other country ?
(A) CARTOSAT
(B) NLS-5
(C) RUBIN-8
(D) GSLV
(E) SCOPE Ans (E)

51. As a policy to boost the agricultural sector in the country, the Govt. of India has taken several special measures over the years. Which of the following cannot be considered a measure/ measures which will have a direct impact(s) on the agricultural sector ?
1. Setting up of a National Food Processing Bank.
2. Opening irrigation, sanitation and water projects for development under public private participation.
3. Efforts to bring down fiscal deficit to 5.5 per cent level of GDP.
(A) Only 1
(B) Only 2
(C) Only 3
(D) Only 1 and 2
(E) All 1, 2 and 3 Ans : (C)

52. The Govt. of India is plannning to bring a Second Green Revolution. This will be launched specifically for which of the following parts of the country ?
(A) North East and Eastern Regions
(B) Central India
(C) Jammu & Kashmir
(D) Tamil Nadu, Kerala and Andhra Pradesh
(E) None of these Ans : (A)

3. As we all know, the limit of exemption on personal income tax has been raised by Rs. 10,000. Whenever a relief in direct taxes is given, the underlying motive is always to make money available for which of the following purposes ?
1. Savings
2. Investment for High returns
3. Personal Consumption
(A) Only 1
(B) Only 2
(C) Only 1 and 3
(D) Only 2 and 3
(E) None of these Ans : (C)

54. As we know, a special scheme ‘One Village One Project’ is in vogue in some parts of our country and has proved a good incentive to boost the rural economy and the agricultural sector. Now the Govt. has decided to develop 60,000 villages to produce which of the following single crops as a major crop ?
(A) Pulses or Oilseeds
(B) Wheat or Bajra
(C) Sugar or Jute
(D) Sunflower or Rose flower
(E) None of these Ans : (A)

5. The Govt. of India has decided to bring down the fiscal deficit from 6.6 per cent to the level of 5.5 per cent of the GDP so that it can meet growth targets well in time. This target of 5.5 per cent is to be achieved by the end of—
(A) January 2011
(B) March 2011
(C) December 2010
(D) January 2012
(E) None of these Ans : (D)

56. Some economists and financial experts are of the opinion that the Finance Minister of India has done a good job by allocating a fairly good share of budget to ensure that the benefits of the growth also reach the poor and unorganized sectors of the society. What amount in terms of percentage has been allocated to various schemes of the social sector in the Union Budget 2010-11 ?
(A) 5%
(B) 7.5%
(C) 10%
(D) 12.5%
(E) None of these Ans : (E)

57. Many people talk about the roll back of stimulus packages provided last year by the Govt. of India to help certain sectors. If these stimulus packages are rolled back, this would mean that—
1. those who have availed these benefits would be required to return them to the Govt. of India.
2. no such incentive would be available henceforth to these sectors.
3. all such benefits/incentives would be available to all the people across the country and will not be
restricted to some selected few.
(A) Only 1
(B) Only 2
(C) Only 3
(D) Only 1 and 3
(E) Only 2 and 3 Ans : (C)

58. In order to develop infrastructure in the country at a faster pace, the Govt. of India has
fixed some targets. In order to achieve this target, at present, how many kilometers of
highway is required to be constructed per day ?
(A) 5 km
(B) 10 km
(C) 15 km
(D) 20 km
(E) None of these Ans : (D)

59. “South India will get K-G gas by 2012” was the news in a major financial newspaper. ‘K-G’ is the abbreviated name of which of the following ?
(A) Karnataka-Goa
(B) Kaveri-Ganga
(C) Krishna-Godavari
(D) Karnataka-Gulf
(E) None of these Ans : (C)

60. Many a times, we read in newspapers that some big banks have revised their lending rates to make them dearer or cheaper. Though the decision to raise the lending rates is always in the hands of the banks normally they announce this decision of theirs—
1. immediately after the Union Budget is presented in the Lok Sabha every year.
2. when the RBI makes changes in its policy rates.
3. when the Monetary and Credit Policy of the RBI is reviewed periodically.
(A) Only 1
(B) Only 2
(C) Only 3
(D) Only 2 and 3
(E) All 1, 2 and 3 Ans : (C)

61. How much amount in cash is the Govt. of India planning to infuse in public sector banks, to strengthen their capital base this year ?
(A) Rs. 10,000 crore
(B) Rs. 12,500 crore
(C) Rs. 14,000 crore
(D) Rs. 16,500 crore
(E) None of these Ans : (E)

62. As we all know, the rate of MAT has been increased from the present 15% to 18% with
effect from April 2010. What is the full form of MAT ?
(A) Maximum Alternate Tax
(B) Minimum Alternate Tax
(C) Minimum Affordable Tax
(D) Maximum Affordable Tax
(E) None of these Ans : (B)

63. One of the headlines in a major financial newspaper recently was “Is Spain the next Greece or Italy or Portugal ?” What is the actual meaning of this headline because of which the author has been comparing Spain with the other three countries ?
(A) All these three countries have abandoned the membership of the European Union. Spain is also planning to do so
(B) All these three countries were the first to come out of recent global recession and that too within a short span of time. Spain is next in queue to declare itself free from the trouble
(C) These three nations are badly trapped in a situation where their economy is proceeding from bad to worse condition. Spain also appears to be in the same situation
(D) Greece, Itlay and Portugal have signed some special agreements with US and are availing stimulus packages to promote their exports to US on some specific terms. Spain is also willing to do the same
(E) None of these Ans : (C)

64. Many times we read in newspapers that several companies are adopting the FCCBs route to raise capital. What is the full form of FCCBs ?
(A) Foreign Currency Convertible Bonds
(B) Foreign Convertible Credit Bonds
(C) Financial Consortium and Credit Bureau
(D) Future Credit and Currency Bureau
(E) None of these Ans : (A)

65. The Govt. of India has asked all big companies and corporates to create a separate fund
for their ‘Corporate Social Responsibility Activities’. What is/are the purpose(s) of this
directive issued by the Govt. ?
1. To ensure that companies spend some money on social activities.
2. To bring tr Ansparency in matters of financial tr Ansactions and dealings by corporates.
3. To ensure that corporate entities do not get involved in non commercial activities in the name of social activities as they are required to spend money only on the welfare of the employees and their families.
(A) Only 1
(B) Only 2
(C) Only 3
(D) All 1, 2 and 3
(E) None of these Ans : (B)

66. Which of the following is an innovative mechanism adopted by banks to meet the targets fixed for lending to priority sector by the Banks ?
(A) Buying & Selling of Priority Sector Lending Certification
(B) Sale of Kisan Vikas Patra
(C) Inter Bank Participation Certificates
(D) Adoption of Core Banking Solution
(E) None of these Ans : (C)

67. The Reserve Bank of India (RBI) recently announced a hike in some policy rates and also indicated that there may be another change in near future. Which of the following is/are considered a policy rate(s) in the hands of the RBI ?
1. Repo Rate
2. SLR
3. Inflation
(A) Only 1
(B) Only 2
(C) Only 3
(D) Only 1 and 2
(E) All 1, 2 and 3 Ans : (D)

68. Zain, which was in news recently, is a company based in which of the following nations ?
(A) Kuwait
(B) South Africa
(C) UAE
(D) China
(E) None of these Ans : (A)

69. Who amongst the following was awarded the prestigious ‘Moortidevi Award’ recently for his literary works ? (Awardee is a Minister in the Union Cabinet)
(A) Veerappa Moily
(B) Pranab Mukherjee
(C) P. Chidambaram
(D) Kapil Sibal
(E) None of these Ans : (A)

70. The Indian Ministry of Agriculture has decided that despite good stocks of wheat and rice, India will not export the excess stocks. Which of the following may be the reason(s) owing to which the Ministry has taken this decision ?
1. Indian wheat and rice are not in much demand in foreign countries. Hence, very few are takers for the same.
2. The National Food Security Bill has a provision to provide 25 kg of wheat or rice to the families living below poverty line. A huge stock of grains will be needed for the same in near future.
3. Since most countries are still to recover from the global recession, a formula is being worked out where imports and exports will be compensated simply by exchange of commodities available with the countries. India is planning to use its food grain stocks for the same.
(A) Only 1
(B) Only 2
(C) Only 3
(D) All 1, 2 and 3
(E) None of these Ans : (B)

71. As per the reports published in various newspapers, RBI has asked banks to make a plan to provide banking services to all villages having a population of 2000. This directive issued by the RBI will fall in which of the following categories ?
(A) Plan for Financial Inclusion
(B) Efforts to meet the targets of Priority Sector Lending
(C) Extension of Relief Packages to the Farmers
(D) Extensions of Internal and Branchless Banking
(E) None of these Ans : (A)

72. Which of the following is not a bank or finance company ?
(A) Barclays
(B) BNP Paribas
(C) Lufth Ansa
(D) HSBC
(E) All are banks/finance companies Ans : (C)

73. The Indian Railways is in the process of purchasing Bullet Train Technology from which of the following nations ?
(A) France
(B) China
(C) Japan
(D) Russia
(E) Spain Ans : (C)

81. Three Indian sportsmen, C. Raju Srither, I.R. Sanam and Ratan Singh recently went to Indonesia and won Gold Medals in one of the events. All three are associated with which of the following sports ?
(A) Weightlifting
(B) Rifle Shooting
(C) Swimming
(D) Golf
(E) Archery Ans : (E)

83. By nominating its Ambassador to which of the following countries after a gap of five years has the USA established its diplomatic relation with it ?
(A) Syria
(B) Iran
(C) Iraq
(D) China
(E) None of these Ans : (A)

84. Which of the following organizations/ agencies is providing a US $ 850 million loan to India for the development of its infrastructure and Khadi industry ?
(A) World Bank
(B) European Union Finance Corporation
(C) Asian Development Bank
(D) Govt. of South Africa
(E) None of these Ans : (C)

86. The census in India is done after a gap of every—
(A) 5 years
(B) 10 years
(C) 12 years
(D) 15 years
(E) None of these Ans : (B)

87. Pankaj Advani won which of the following titles in the year 2009 ?
(A) Asian Games Gold Medal
(B) Asian Billiards Championship
(C) WSA Challenge Tour
(D) World Professional Billiards Championship
(E) None of these Ans : (D)

88. Which of the following awards is given for Excellence in the field of sports ?
(A) Kalinga Award
(B) Golden Pen Award
(C) Arjuna Award
(D) Bharat Ratna
(E) None of these Ans : (C)

89. Which of the following states started ‘April Mandis’ project in all districts of the state to ensure the supply of vegetables and fruits at fair prices ?
(A) Gujarat
(B) Uttar Pradesh
(C) Haryana
(D) Delhi
(E) None of these Ans : (C)

90. Which of the following terms is not used in Economics ?
(A) Balanace of Trade
(B) Centrifugal force
(C) Break even
(D) Fiscal Deficit
(E) Capital Account Ans : (B)

92. The Govt. of India recently launched the Jawaharlal Nehru National Solar Mission. This mission is one of the key missions on India’s National Action Plan on—
(A) Second Green Revolution
(B) Climate Change
(C) Recharging of Water bodies
(D) Electricity to all
(E) None of these Ans : (B)

93. Voting in local bodies elections is compulsory in which one of the following states ?
(A) Delhi
(B) Maharashtra
(C) Kerala
(D) Gujarat
(E) None of these Ans : (D)

94. India’s exports of which of the following to USA has been growing at a fast pace despite the global slowdown and recession ?
(A) Handicrafts and Carpets
(B) Textiles and Clothing
(C) Horticultural products
(D) Foodgrains
(E) Services Ans : (E)

95. Russia recently agreed to resume import of natural gas from which of the following countries after a gap of about a month following a dispute over prices of the same ?
(A) Iran
(B) Turkmenistan
(C) China
(D) Kazakhstan
(E) N. Korea Ans : (B)

96. India recently signed an agreement for cooperation in the field of nuclear power for civil purposes. This agreement is free from any restrictions on India. India signed this agreement with—
(A) France
(B) Germany
(C) USA
(D) Canada
(E) Russia Ans : (E)

8. Which of the following prizes/ awards is not given for Excellence in the field of Literature ?
(A) Dronacharya Award
(B) Aga Khan Prize for Fiction
(C) Commonwealth Award
(D) Nobel Prize
(E) Man Booker Prize Ans : (A)

99. Which of the following terms is not used in the game of Hockey ?
(A) Centre
(B) Downswing
(C) Drop pass
(D) Goal line
(E) Blue line Ans : (B)

1. Which of the following statements is true?
a) The licence to open branches of bank is granted by Board of Directors of that Bank
b) There is no need of licenses to open branch of a bank
c) A licence to open a branch is issued by the Central Government
d) A licence to open a branch is issued by the Reserve Bank of India under the provisions of Banking Regulation Act, 1949

2. The important condition for granting licence of banking companies is?
a) Banking company need not plan to pay for future depositors
b) Banking company can plan for its capital structure once the licence is granted
c) The business undertaken by the banking company should not frustrate the interest of public
d) The banking company can undertake business other than banking with the permission of annual general body

3. Who of the following is not a party to the IPO?
a) Registrar of Issue
b) Investment Banker
c) Advertisement Agency
d) Registrar of Companies

4. Which of the following is not shown as an asset in the balance sheet of a Bank?
a) Investments
b) Advances
c) Cash Balances with other banks
d) Borrowings

6. Which of the following is a function of the agent bank relating to flow of money in the process of loan syndication?
a) Receiving notices relating to cancellation of any part of the loan
b) Calling of loans in the event of default
c) Receiving the fee from the borrower and distributing among the participating banks
d) Receiving notices relating to transfers of banks

7. Which of the following is the parameter to recognize the SSI unit as sick unit?
a) The erosion in the net-worth due to accumulated losses is up to 25% of its net worth during the previous account year
b) The erosion in the net-worth due to accumulated losses is up to 50% of its net worth during the previous account year.
c) The unit should have been in commercial production for at least five years
d) Lack of updations in technological development

8. Which of the following is not the service provided by the Small Industries Service Institute?
a) Providing entrepreneurship development programs
b) Developmental efforts
c) Export promotion and liaison activities
d) Financial support

10. Which of the following cannot be securitized?
a) Future rentals of a fishing boat
b) Hire purchase receivables
c) Demand drafts received by the banker during clearing
d) Future billings for an airline

11. Which of the following statements is true?
a) The special purpose vehicle (SPV) purchases the assets from the borrower directly during the securitization
b) The originator and obligor are the same persons in securitization process
c) Administrator collects the payments due from the obligor and passes it to the SPV and follows with defaulters
d) Mortgage based securitization provides high yields to the investor

12. The important feature of an anticipatory letter of credit is that?
a) The letter of credit can be used as back- to- back letters of credit
b) The beneficiary under the letter of credit may receive payment even at the pre-shipment stage
c) The beneficiary under the letter of credit may receive payment even at the post-shipment stage
d) The cash advance is not permitted against such letter of credits

13. The Shipping guarantee is a?
a) Type of a letter of credit
b) Guarantee issued by the ship captain to the purchaser
c) Guarantee issued to the borrower towards the loan granted by the shipping company
d) Deferred payment guarantee issued by a banker at the request of the consignee when the documents are not received and goods are received, for facilitating the delivery of goods.

14. Which of the following statements is true?
a) The charge card is a credit instrument
b) Under this facility the cardholders need to pay amount within ten installments
c) Cardholder has to pay the 100% of the purchase amount within 30 days of purchase
d) The charge card shall have revolving credit

15. Which of the following is not augmented feature of a credit card?
a) Personal accident insurance
b) Cash withdrawals
c) Add-on facility
d) Issue of deferred guarantee

16. Which of the following is the disadvantage of going for public issue?
a) Liquidity to existing shares
b) Increase in visibility and reputation to the company
c) Better pricing and placement with new investors
d) Need to make continuous disclosures

17. Which of the following is not a criterion to select the Investment Bankers?
a) No professional memberships or incorporations are required
b) General reputation in the market
c) Good rapport with market intermediaries
d) Distribution net work of the organization

18. Which of the following is not an asset of a bank?
a) Notes and small coins
b) Overdue recurring deposits
c) Short term loans
d) Staff advances

19. The banking company has restriction to sanction loan to?
a) Directors of the bank
b) Staff working in the bank
c) Students going abroad
d) Professionals

21. The disadvantage associated with leasing company is?
a) Low costs
b) Flexibility in payments
c) Eliminates the risk of obsolescence
d) High competitions because of entry to all financial institutions

22. Which of the following theory is associated with the financial system in the economic growth?
a) Retributive theory
b) Reformative theory
c) Financial repression theory
d) Jurisdictional theory

23.Which of the following is not a financial intermediary in the financial markets?
a) Pension funds
b) Credit unions
c) Life insurance companies
d) Small scale service institute.

24 Which of the following is not a function of a commercial bank?
a) Registration of charges and mortgages
b) Transactions services
c) Asset transaction
d) Real-time Gross Settlement

25. Which of the following is one of the three pillars of new Basel Capital Award?
a) Market competitions
b) Market rapport
c) Market discipline
d) International market relations

26. The interest in savings bank accounts of a bank is calculated on?
a) Minimum amount of balance that is maintained in the account in between 10th and the last day of month
b) Maximum amount of balance that is maintained in the account in between 10th and the last of month
c) Minimum amount of balance that is maintained in the account in between 1st and the last day of month
d) Maximum amount of balance that is maintained in the account in between 1st and the last of month

29. The origin of bank instruments can be traced to?
a) The priests and worship places of public deposits
b) Goldsmith receipts
c) Bonds issued by the British Government in India
d) Bank notes issued by Bank of Venice

30. Which of the following is not the function of commercial banks?
a) Providing transaction services
b) Intermediation in financial services
c) Providing transformation services
d) Regulating the issue of bank notes.

31 Which of the following is the most important challenge before the commercial bank?
a) Maintenance of foreign currency
b) Evaluating the need of the customers
c) Maintenance of SLR and CRR
d) Meet the technological revolution

33. Which of the following is an income for a bank?
a) Depreciation on bank's property
b) Interest on inter bank borrowings
c) Profit on revaluation of investments
d) Provisions made on account of write-offs

34. Saving Bank Account can be opened in the name of ?
a) State text book printing corporations
b) District level housing cooperative societies
c) Communist Party of India
d) Aravind Samuel, Anurag Deepak and Amarish Sugandhi Jointly

36. Which of the following statements is true?
i. Term deposits are non-transaction deposits
ii. Cheques can be issued on short-term deposits
iii. All term deposits are interest bearing deposits
a) (i) only
b) (ii) only
c) (iii) only
d) (i) and (iii)

37. The credit policy laid down by the top management of a bank does not deal with?
a) Credit risk management
b) Pricing of the credit products
c) Appraisal of time and demand deposits
d) Documentation standards.

38. Which of the following factors is not required to be considered to analyze the repayment capacity of a borrower?
a) Working capital management
b) Personal educational qualifications
c) Financial leverage
d) Interest rate risk management

39. Which of the following is a facilitating service of core loan products of retail banking services?
a) Current or savings accounts
b) Legal services for documentation
c) Delivery of loan at promised time period
d) Flexibility in prepayment of loan

40. Which of the following is an most important advantage of retail banking on the resource side?
a) Consumer loans are low risk products
b) Innovative product development and disbursal
c) Increases the subsidiary business of a bank
d) Requires less efforts to market retail loan products

41. Lenders may not provide trade-offs to the borrowers on the basic term of consumer installment credit relating to?
a) Interest rate
b) Maturity of the loan
c) Maturity of the deposit
d) Quantum of finance

43 The advantage of consortium finance is?
i. Speedy transactions and individual approach
ii. Involvement of huge amounts
iii. Use of expertise of all the banks
a) (i) only
b) (ii) only
c) (iii) only
d) (i), (ii) and (iii)

44 Which of the following is not a function of the agent bank in loan syndication?
a) Ensuring the compliance of conditions precedent under the loan agreement
b) Determining the LIBOR interest rate for each interest rate
c) Planning for future syndication of loans
d) Receiving notices relating to cancellation of any part of the loan

45. Which of the following is not a phase/step in the formation of loan syndication?
a) Finalization of supply agreement
b) Identify the needs of the borrower
c) Preparation of information memorandum
d) Invite other banks to participate

46. Which of the following statements is true?
a) SSI is an undertaking in which the investments in fixed assets in plant and machinery does not exceed one million
b) Small and medium enterprises both in size and shape are not homogenous in nature
c) The small and medium enterprises contribution towards the GDP is nominal
d) Small and medium enterprises do not support the large industries.

47. The Nayak Committee has suggested the turnover method for assessing the working capital and pegged it at?
a) 15% of the projected annual turnover, as working capital limit
b) 20% of the projected annual turnover, as working capital limit
c) 25% of the projected annual turnover, as working capital limit
d) 30% of the projected annual turnover, as working capital limit

48. Which of the following is not a part of the rehabilitation package granted for revival of sick industry?
a) Waiver of penal interests
b) Funding by sanctioning of term loans towards the unpaid installments of loans
c) Grant of additional working capital loans
d) Not demanding the promoters contribution towards the rehabilitation package

51. Which of the following is a type of anticipatory letter of credit?
a) Green clause letter of credit
b) Yellow clause letter of credit
c) Back to back letters of credit
d) Revolving letter of credit

52. Performance guarantee is issued?
a) In lieu of earnest money
b) In lieu of retention money
c) In lieu of indemnity bonds
d) For successful competition of Turnkey projects

53. Which of the following is not a transfer of funds by using the electronic media?
a) Mail transfer of funds
b) Telegraphic transfer of funds
c) Electronic credit transfers
d) Electronic clearing transfers

54. Which of the following is not an augmenting feature of credit cards?
a) Personal accident insurance
b) Cash withdrawal facility
c) Add-On facility
d) Automatic recovery of interest on term loans

55 Which of the following is a disadvantage of going public issue?
a) Provides liquidity to existing shares
b) Commands better pricing than placement with few investors
c) Increased regulatory norms
d) Enables valuation of the company

56 Which of the following is not a reason for regulating the banking operations?
a) Banks hold a major portion of the public savings
b) Banks intermediate between the savings and investments
c) Banks hold a large part of the money supply
d) Banks earn profit from non-fund services

57. Which of the following statements is true?
a) Resave Bank of India empowers the banks to open branches according to their will and pleasure
b) Reserve Bank of India is a central bank which monitors only lending activities pertaining to export credit
c) Banks have authority to establish the ATMs at their convenience
d) Rural banks of commercial banks do not have freedom to issue credit cards

61 Which of the following businesses is prohibited as per Sec 8 of B.R Act 1949?
a) Executing the trusts
b) Leasing
c) Retail trading
d) Underwriting

62. Which of the following is not one of the essential elements of internal audit?
a) Totality
b) Expertise
c) Independence
d) Subjectivity

63. The letter of credit, which facilitates the exporter to get pre- shipment finance (from the stage of purchase of raw material until the warehousing of the finished goods) from advising bank is called?
a) Red Clause LC
b) Lines of credit
c) Packing credit loan
d) Green Clause LC

64. A term loan is classified as a non-performing asset, if interest or installment is overdue for period exceeding how many days?
a) 90
b) 91
c) 180
d) 182

70. Which of the following is not one of the RBI directives on clean note policy?
a) Currency note packets are not to be stapled and secured with paper bands
b) Soiled notes are to be stapled before they are remitted to Currency Chest.
c) Water mark window of bank notes shall not contain any writings
d) Currency notes are to be sorted in to Issuable and non-issuable notes.

78. The Reverse Repo has the following characteristic?
a) Borrowing by RBI from banks
b) Borrowing with government security as collateral
c) Short term borrowing
d) All of these

79. Under the Nayak Committee recommendations, the quantum of working capital limits from the bank is minimum percentage of the projected annual sales?
a) 5%
b) 15%
c) 20%
d) 25%

80. Banks insist on providing finance for those projects or activities only which they consider to be viable. What is meant by viability of project?
a) Capacity to generate cash, adequate to service debt and surplus for borrower's personal requirement.
b) Generation of cash to meet debt liability
c) Generation of profits.
d) Generation of gross profits

81. Letter of negative lien obtained from borrower by a bank contains?
a) An undertaking that the property mortgaged to the bank is his own
b) A confirmation that the borrower had earlier deposited title deeds to create mortgage on the property.
c) An undertaking not to create any encumbrance/lien on the property which he owns but not yet mortgaged to the bank
d) A declaration that he is the joint owner of the property furnishing the details of his share and valuation thereof.

82. Which of the following statement is CORRECT?
a) Consortium advances to be treated as NPA on the basis of recovery by individual banks
b) If one facility of a borrower is treated as NPA other facilities to him also to be treated as NPA even if there are no irregularities in that account.
c) Consortium must be formed if the total exposure of fund based limit exceeds Rs 100 crore.
d) Both (a) and (b)

83. If an IPO is under-priced, which of the following can be considered as consequences/implications of the same?
I. The company looses the opportunity to raise more funds
II. Under pricing would give less returns to the investor
III. Under pricing results in lower net worth on an increased equity.
a) Only (II) above
b) Only (III) above
c) Both (I) and (III) above
d) Both (II) and (III) above all.

84. Corporate Bank files suit for recovery of its loan against the guarantor only and not the borrower. Guarantor pleads in the court that before filing suit against him, money should be recovered from the borrower. In such circumstances, the bank can seek recourse in the court against?
a) All the liable parties together only
b) Any one of them at a time
c) All separately
d) At its discretion it can proceed against any one

85. A letter of credit (LC) wherein the credit available to the customer gets reinstated after the bill is paid is known as?
a) Back to back LC
b) Red clause LC
c) Back to front LC
d) Revolving LC

87. Large corporate customers demand?
a) Short term products from their banks irrespective of the cost at their times of need.
b) Increasingly sophisticated products from their banks at the lowest possible cost.
c) Disintegrated financial products from their banks at the lowest possible cost.
d) Basic banking products from their banks but with speed and efficiency.

89. Which of the following is not directly involved in rural lending?
a) Cooperatives
b) RRBs
c) Commercial banks
d) SIDBI

90. PACSs provide?
a) Mainly long term credit
b) Mainly short term credit
c) Both long term and short term credit
d) Do not provide any credit

91. The purpose of which is to make credit of available to essential sectors of the economy according to national priorities?
a) Selective Credit Control (SCC)
b) Maintenance of cash reserve
c) Reserve fund
d) Comprehensive Credit Control

92. The system of note issue followed by the RBI is?
a) Proportional reserve system
b) Minimum reserve system
c) Minimum fiduciary system
d) Maximum fiduciary system

93. The rate at which the Reserve Bank of India lends to the commercial banks in very short term against the backing of the Government securities is known as?
a) Bank rate
b) Repo rate
c) Reverse Repo
d) Discount rate

94. Scheduled banks are those?
a) Includued in the 2nd schedule of the Banking Regulation Act-1949
b) Includued in the 2nd schedule of the Companies Act-1956
c) Includued in the 2nd schedule of the Reserve Bank of India Act -1934
d) Bank Nationalization Act -1969

95. The following is classified as a public sector bank?
a) ICICI Bank
b) IDBI Bank Ltd
c) Axis Bank
d) Local area bank

1. Which of the following bodies tightened the norms for foreign exchange risk cover in India mentioning that only companies with a networth of Rs 200 crore can use derivatives to hedge against risk of volatility in currency rates?a. IMFb. Reserve Bank of Indiac. SEBId. Union Ministry of FinanceAns: b

3. (1) The report on Customer Service in Banks by a committee chaired by M. Damodaran, former Chairman of the Securities and Exchange Board of India (SEBI) that was released on 3 July 2011 recommended an increased deposit insurance cover of Rs.5 lakh so as to encourage individuals to keep all their deposits in banks.
(2) The panel also suggested blocking of lost ATM cards through SMS and immediate restoration of funds in case of non-dispensation of cash at an ATM within 5 working days.
Which of the above is not true?a. Only 1b. Only 2c. Both 1 & 2d. None of the aboveAns: b

4. The Reserve Bank of India (RBI) in a bid to tame inflationary pressure hiked the short-term indicative policy rate (repo rate) by 50 basis points on 26 July 2011. The repo rate currently stands at what percentage?a. 7%b. 7.5%c. 8%d. 8.5%Ans: c

5. Which bank posted a 99 per cent drop in net profit at Rs 21 crore for the fourth quarter ended 31 March 2011 against Rs 1867 crore during the corresponding period in 2010?a. Indian Overseas Bankb. State Bank of Indiac. Bank of Indiad. United Bank of IndiaAns: b

6. Who did global payments processing company MasterCard appoint as the General Manager, South Asia and Country President, India?a. T. V. Seshadrib. Vicky Bindrac. Tunde Lemod. Ajay BangaAns: a

7. Government of India on 19 July 2011 appointed Usha Ananthasubramanian, former general manager of Bank of Baroda (BoB) as executive director of which public sector lender?a. Central Bank of Indiab. Punjab National Bankc. United Bank of Indiad. Gramin BankAns: b

8. Name the public sector lender that selected Metlife as its partner for a proposed foray into the life insurance segment.a. Syndicate Bankb. Punjab National Bankc. Corporation Bankd. United Bank of IndiaAns: b

11. Which of the following public sector banks in November 2011 froze its lending to the power sector?a. State Bank of Indiab. Allahabad Bankc. Punjab National Bankd. United Bank of IndiaAns: b

12. Which Indian bank on 10 May 2011 raised benchmark prime lending rate 75 basis points to 14% following raising of interest rates by RBI by basis points on 3 May 2011?a. State Bank of Indiab. Union Bankc. Punjab National Bankd. Bank of BarodaAns: a

13. The Reserve Bank of India on 26 April 2011 fined 19 banks, including the country's top private and foreign banks for violating its guidelines on derivatives. Which is the only public sector bank on the list of banks to be fined?a. State bank of Indiab. Punjab National Bankc. Bank of Indiad. Indian BankAns: a

14. The Reserve Bank of India on 25 August 2011 released its Annual Report for 2010-11. Which of the following was not discussed in the Annual Report the Central Board of the RBI?a. assessment of the macroeconomic performance during 2010-11b. prospects for 2011-12c. working and operations of the Reserve Bank and its financial accountsd. role of regulatory bodies in controlling the financial marketsAns: d

15. Reserve Bank of India (RBI) panel headed by headed by Usha Thorat, Director, Centre for Advanced Financial Research and Learning (CAFRAL) on 29 August 2011 came up with suggestion on non-banking finance company (NBFC). Which of the following related to this statement is not true?1. The panel suggested the central bank to insist on a minimum asset size of more than Rs.25 crore for registering any new non-banking finance company (NBFC)2. Transfer of shareholding, direct or indirect, of 25 per cent and above, change in control, merger or acquisition of any registered NBFC will require prior approval of the Reserve Bank.3. Tier-I capital for capital to risk weighted assets ratio (CRAR) purposes would be specified at 12 per cent to be achieved in three years for all registered deposit-taking and non-deposit-taking NBFCs.4. NBFCs would be subject to regulations similar to banks while lending to stock brokers and merchant banks and similar to stock brokers, as specified by the Securities and Exchange Board of India (SEBI)a. 1 & 4b. 2 & 4c. Only 4d. Only 1Ans: d

16. Which Indian PSU bank in tune with its plans to expand its retail division in the UK entered the mortgage market in the country for the first time?a. Punjab National Bankb. Oriental Bank of Commercec. State bank of Indiad. Indian Overseas BankAns: c

17. Which of the following banks set up two loan processing centres for the small and medium enterprise (SME) segment on a pilot basis in Bangalore & in New Delhi in September 2011?a. Corp Bankb. United Bank of Indiac. Syndicate Bankd. Bank of BarodaAns: c

18. The government suspended M Ramadoss for alleged violations in issuing insurance cover to an airline during his stint as head of another state-run insurer. To which insurance group did he belong to?a. New India Assurance b. LICc. GICd. ICICI InsuranceAns: a

19. Which of the following banks in early May 2011 entered into a tie-up with non-banking finance companies such as Future Capital, Bajaj Finance, and Reliance Capital to grow its retail portfolio?a. Central Bank of Indiab. State Bank of Indiac. Bank of Indiad. HDFC BankAns: a